Adjusting Entries - Khan Company

A review of the ledger of Khan Company at December 31, 2006, produces the following
data pertaining to the preparation of annual adjusting entries.

1. Prepaid Insurance $9,800. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on July 1, 2005, for $6,000. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2006, for $4,800. This policy has a term of 2 years.

2. Unearned Subscriptions $49,000. The company began selling magazine subscriptions in 2006 on an annual basis. The magazine is published monthly. The selling price of a subscription is $50. A review of subscription contracts reveals the following.

Subscription Number of
Date Subscriptions
October 1 200
November 1 300
December 1 480
980 (total)